ZONE 7 WATER AGENCY VIOLATES BROWN ACT IN PURCHASE OF PATTERSON RANCH

Executive Summary

Zone 7 Water Agency (Zone 7) is a self-governing special district charged primarily to provide water and manage flood control systems. As a wholesaler of treated and untreated water, its retail customers include several Tri-Valley municipalities. In early 2013, the agency’s board of directors initiated a process to negotiate the price and terms of payment to acquire 4,784 acres of watershed land near Lake Del Valle Reservoir. The acquisition became the subject of a citizen’s complaint that alleged that the process lacked public openness, transparency, and exhibited Brown Act violations. The Grand Jury investigated the complainant’s allegations and found that the acquisition process violated Zone 7’s organizational core values of being open and transparent in its public business, in addition to Brown Act infractions.

Conclusion

Three of the eight core values that Zone 7 professes to guide its mission were ignored during the acquisition of the Patterson property. The Grand Jury believes that the board of directors seriously failed to uphold its organization’s core values. The core values that were ignored were:

Open and Transparent: Zone 7’s website states, “The Board’s meetingsand communications shall be open and public except when the Brown Actauthorizes otherwise.” The Grand Jury concluded that the board of directors failed to maintain a process for purchasing property that was consistent with the Brown Act, and was open and transparent as required by Zone 7’s stated core values. Agency officials discussed items in closed session that should have been placed on the agenda and discussed in open session.

The Grand Jury believes the public is entitled to know:

Why did the agency decide to fast track the acquisition process?

Why was the property not included in the Capital Improvement Program’s Strategic Priorities prior to the acquisition process and approval of purchase agreements?

Who benefited from the purchase and why?

Why did the purchase of the property take priority over other projects listed in the Capital Improvement Program?

Why was there no public explanation prior to the purchase of the property of how the land acquisition fit into the larger scheme of the agency’s mission and vision?

Why was there no public justification on whether the purchase price and terms of payment were a proactive use of agency reserves in relation to other strategic priorities?

How was the property purchase justified as fiscally responsible, innovative, proactive, and environmentally sensitive?

Integrity: Zone 7’s website states, “We practice the highest ethical standards andmaintain open, honest communications at all levels of the organization at alltimes.” The Grand Jury believes that the board of directors failed to maintain high standards of organizational integrity throughout the property acquisition process.

For example:

Prior to approval of the 2013-14 annual budget, there was a lack of opportunity for public scrutiny or comment of how the allocation and budgeting of funds for purchasing the property was

The board of directors failed to make a public case to support and justify the land purchase prior to initiating a process to acquire the property.

The board of directors appeared to be rushing to insert a watershed management resolution into its Capital Improvement Program Strategic Planning Priorities after the purchase price and terms of payment were established and the property was

Fiscally Responsible: Zone 7’s website states, “We will operate in a productive,cost effective, transparent and efficient manner to ensure sound financialstability.” The board of directors failed to provide for appropriate disclosures and public comment during certain critical junctures of the property acquisition process, such as, planning for an $18.6 million fiscal impact on other capital expenditures and the adoption of the 2013-2014 annual budget. Also, the board failed to document whether other agencies that benefited from Zone 7’s financial investment were asked to share the financial burden.

The Grand Jury’s investigation concluded that the Zone 7 Water Agency Board of Directors did not provide appropriate disclosures and opportunities for public input, openness, and transparency. It also improperly applied the Brown Act during the process of acquiring the Patterson Ranch property. The Grand Jury finds that the citizen’s complaint against the Zone 7 Water Agency was credible.

FINDINGS

Finding 15-15: The Zone 7 Water Agency Board of Directors failed to follow the Brown Act, limiting opportunities for public comment and discussion throughout its decision-making process of the Patterson Ranch property purchase.

Finding 15-16: The Zone 7 Water Agency Board of Directors failed to follow its organizational core values of openness, transparency, and fiscal responsibility throughout the process of acquiring the Patterson Ranch property.

Finding 15-17: The Zone 7 Water Agency Board of Directors failed to make a public case supporting and justifying the purchase of the Patterson Ranch property prior to the actual acquisition of the same.

Finding 15-18: The Zone 7 Water Agency failed to publicly disclose funds to acquire the Patterson Ranch property, except as a broad watershed investment, when its Capital Improvement Program Strategic Priorities were adopted.

Finding 15-19: The Zone 7 Water Agency failed to adequately disclose detailed budget information regarding the purchase of the Patterson Ranch property prior to adoption of the 2013-2014 annual budget. The purchase included a questionable use of restricted funds.

Finding 15-20: The Zone 7 Water Agency claimed that the acquisition of the Patterson Ranch property would provide important “watershed” or “watershed protection” or “protection of water rights,” broadening its strategic interests in the region. These interests were not explained to the public until inserted in the documents after the actual acquisition of the property.

Finding 15-21: The Zone 7 Water Agency Board of Directors did not follow Brown Act protocols by failing to disclose in a timely manner actions taken during closed session that affected a Zone 7 partnership with East Bay Regional Parks District serving mutual interests after the acquisition of the Patterson Ranch property.

RECOMMENDATIONS

Recommendation 15-15:

The Zone 7 Water Agency Board of Directors and general manager must strictly follow established rules and practices for conducting agency business in an open and transparent manner consistent with its organizational core values and the Brown Act. Specifically, the Zone 7 Water Agency must:

Post board meeting agenda items in advance of public meetings as required by

Provide ample time and opportunity for public comment and participation before taking

Publicly report board decisions and actions made in closed meetings in a timely and complete

Publicly report actions and individual votes made by each board member in closed sessions.

Recommendation 15-16:

The Zone 7 Water Agency must provide greater transparency, making archived video or audio of public meetings available on Zone 7’s website.

Recommendation 15-17:

The Zone 7 Water Agency Board of Directors must implement a plan of action to ensure public awareness and provide opportunities for attendance and participation at board meetings.